Are you at risk?

How vulnerable is your supply chain to disruption? Here are 10 questions you need to address.

By Mitch Mac Donald

Assessing a supply chain's vulnerability to disruption is a specialty of IBM's Lou Ferretti. A director within Big Blue's hulking Integrated Supply Chain operation, Ferretti recently spearheaded the development of an internal supply chain risk and vendor risk assessment program.

The project required considerable time and resources, as the ways in which a supply chain can be disrupted are manifold. Whether from bad weather, geopolitical strife, a natural disaster, a business setback, or a host of other occurrences, the disruption of a supply chain can bring a company's operations to a screeching halt—an expensive proposition to be sure. Supply chain disruptions can range from a nuisance to a catastrophe for you and your company's operations.

Ferretti's project at IBM is a reflection of that realization. Even the most resilient of supply chains still face some risk of disruption. Given today's market dynamic and the quest for optimal efficiency and customer service, it's important to be sure you are doing all you can to avoid a business calamity.

To help you determine if you are prepared for disruption and able to respond quickly with a fix, consider the following questions. If you don't have answers, don't fret, but do starting thinking about them and do get them answered—pronto!

• What do you do if the power grid shuts down? Yeah, you have a generator, but how much fuel do you have? How often do you run it? Is it big enough to let you run full up? Do you have critical parts on hand or failover capability in the form of a backup unit?
• If you are importing or exporting, what do you do if the ports shut down or slow down? Do you have a plan to divert to other ports? Will you shift critical shipments to more-expensive air freight?
• Are you ready for a hurricane, or a tornado, forest fire, or some other natural disaster? Lots of people in New Jersey thought they were fine when Sandy came barreling in, and then they discovered they weren't so fine. What sort of winds can your facility withstand? Are you in a flood plain? Do you have pumps? Skimping on equipment you may never use may not be wise when it can protect you from a big bill.
• What holes are there in your insurance? You may think you're covered, but make sure.
• What about access to your facility? How many routes in and out do you have? It does you no good for your facility to remain operational if the access road washes out.
• Do your key suppliers have contingency plans? Keeping your facility going is hard to do if you don't have, say, corrugated.
• Can you provide life support (food, water, beds/bedding, sanitation) for your people for at least 72 hours? If disaster strikes, you may have all hands on deck, and you need to be able to take care of them.
• Do you have a backup communications plan? What happens if the landlines are down and cell service cuts out? Do you have a satellite phone? Do you have Internet connectivity via a dish, bouncing off a satellite?
• Do you have a list of emergency numbers for employees and their families? On 9/11, I had guys in the air and found myself pawing through files to find spouses' names and phone numbers to keep them in the loop.
• What about security? Civil unrest happens, even in this country. If things start getting weird, whom do you call? When there are mobs in the streets, law enforcement may not be able to specifically help you. So, whatcha gonna do?

The time to decide how you would respond is before you have to respond.